GST Rate Cuts Make Medicine Affordable, Insurance Accessible: Apollo Hospital's Shobana Kamineni

The goods and services tax on medicines have been slashed to 5% while some life-saving drugs are now tax-free. In terms of the GST cut trickling down to the customers, Shobana Kamineni, the promoter director of Apollo Hospitals Enterprise Ltd., hopes to pass on the 5% benefit on to the consumers.

The GST reforms are a "master stroke" by the government, signaling a shift to boost internal consumption, according to Kamineni. She shared her experience in the parliament when the GST was passed, noting the run-up to it was a lot of work and the system remained confusing with different rates and classifications.

She now sees the reforms as a brilliant move following the dark clouds that have been seen in global trade.

According to Kamineni, the GST cuts will have a two-fold impact on the healthcare sector.

The first is in pharma retail and distribution, where the GST has been lowered to 5%, with life-saving and cancer drugs becoming nil tax. Noting that there is quite a lot of back-end work to be done, she still calls it good work as it translates into customers getting medicines cheaper.

She emphasised, "People will buy medicine out of necessity, but more people will have the dignity to afford it." Calling this a ''very humanitarian move'', she noted that the impact of this is huge.

"Its a large figure we are looking at as we have about 15,000 crores\ of retail sales of which 8,000 crore is about medicines. So we can pass down almost 5% to customers. We are only 7% of the market and that makes this a big step," she said.

The second major area of impact is insurance and Kamineni noted that the decision to remove GST on life and health insurance is 'the best move you can do.' She believes this will lead to a rationalisation of policy costs and bring way more insurance coverage.